Ethiopia’s $3.4bn IMF deal paves way for debt restructuring

AFRICAN BUSINESS AND ECONOMYJuly 31, 2024 at 9:37 PM UTC

TLDR

Ethiopia secures $3.4 billion IMF deal for debt restructuring completion in 3-6 months, after floating currency.
State Minister of Finance anticipates finalizing debt restructuring before next IMF review.
IMF deal paves way for Ethiopia to access $16.6 billion from World Bank and other creditors.

Ethiopia’s new $3.4 billion financing deal with the International Monetary Fund (IMF) is set to facilitate the completion of its long-delayed debt restructuring within the next three to six months, according to a senior finance ministry official.

The announcement of the four-year, $3.4 billion program on Monday followed Ethiopia's decision to float its currency, the birr, which was one of the IMF’s key recommendations.

State Minister of Finance Eyob Tekalign said that "debt restructuring should be finalized before the next IMF program review," typically within three to six months. Following the IMF deal, Ethiopia is expected to secure up to $16.6 billion in additional financing from the World Bank and other creditors, as reported by Bloomberg.

Key Takeaways

News of the IMF deal boosted the $1 billion government bond at the center of the restructuring plan to its highest level since October 2021 on Tuesday. A more than 2 cents jump left it trading at almost 78 cents on the dollar, representing just over a 20% discount of its original face value. In the foreign exchange market, leading commercial banks quoted the Ethiopian birr at 74.74 against the dollar, unchanged from where it had settled after Monday’s float announcement caused it to drop 30% against the dollar.

Ethiopia

Currency

Birr

Economy

IMF

Foreign Currency

Debt Restructuring

Debt Revamp

Debt Crisis